An inaccurate appraisal can really throw a wrench in the home buying process. If you’re the buyer, the bank will only let you borrow up to the appraisal amount, so you might not be able to buy the house. If you’re the seller, you’ll also possibly lose out on a potential buyer. Closely analyze the appraisal for errors. Then request that the appraiser reconsider their appraisal, or you can hire a second appraiser.[1]

Steps

Part 1

Analyzing the Appraisal

1

Check the appraisal for simple errors. Sometimes, an appraiser might make an easy mistake, such as saying your home had two bedrooms when it really has three.[2] This type of error can impact the entire appraisal, so give the appraisal a quick scan for these kinds of mistakes.

Other common errors include making a mistake on the number of bathrooms or calculating the wrong square footage.[3]

2

Assess whether the comps are similar. An appraiser uses homes that are similar to yours in order to come up with a market value. These homes are called “comps.” Sit down with your real estate agent and analyze the comps used. Pay attention to the following:[4]

lot size

square footage

age

amenities

condition of the comps

where on the block each comp is located

when the comp was sold

whether the comps are in the same school district

3

Ask questions about the appraiser. The appraiser might not have been the best person to appraise your house. You should ask the bank about the appraiser, in particular the following:[5]

Did the appraiser walk through your home? Ideally, they should go through the property to check it instead of driving by.

Does the appraiser live in the area? A local appraiser is more attuned to nuances in the local housing market.

Part 2

Challenging the Appraisal

1

Find newer comps. Your appraiser should have used comps for properties sold in the past 90 days. However, they might have overlooked properties, such as a home in your neighborhood that sold shortly after the appraisal was completed. This is a great comp to show the bank.[6]

The appraiser can only find comps if they are listed in MLS, the Multiple Listing Service. Some homes are sold without being listed, so it’s great if you can find one of them.

2

Identify more appropriate comps. The appraiser might have used comps in an entirely different neighborhood, or they might have used a rundown home as a comp when your home is in good repair. Find reasons why the comps used aren’t appropriate and then find better ones.[7]

The appraiser might have used a foreclosed home in the area as a comp. If there are very few foreclosures, then you should find a different property or ask for a market adjustment.[8]

As you do your own research, use the MLS data and avoid other data on the web, such as Zillow Zestimates.[9]

3

Find missing permits. You might have built an addition to your home, thinking it would increase the value. However, the appraiser can’t include it in the appraisal unless you had a proper permit before building. Sometimes, permits are not stored properly, so go to city hall and try to find the permit if it is missing.[10]

4

List upgrades you have made. Even if the appraiser walked through your home, they might have missed all of the upgrades that you’ve made.[11] For this reason, sit down and write out a list of recent home improvements, such as the following:[12]

updated bathroom or kitchen

new décor

new roof

new furnace or air conditioning

finished basement

5

Ask your lender about the reconsideration process. Most lenders have a process in place, so all you need to do is ask.[13] You may need to complete a form or write a letter. The bank needs to make a request for reconsideration, so contact them first.[14]

6

Request consideration. You might need to write a letter to the bank, and you can find sample reconsideration letters online.[15] In your letter, critique the comps and explain how they differ from your home. Also point out newer comps and any upgrades that were overlooked.

Ask the appraiser to reconsider the appraisal, but never suggest a number.

Remember to maintain a diplomatic tone throughout your letter. Avoid expressing anger or sarcasm, even if the appraiser made a simple mistake (such as under-counting the number of bedrooms).

7

Have your realtor meet with the appraiser. Make sure your realtor is armed with your research: missing permits, upgrades, and new and better comps. The appraiser should be willing to meet with your realtor to go over the appraisal.[16]

Part 3

Obtaining a Second Appraisal

1

Ask your bank to pay for a second appraisal. The appraiser might refuse to change the initial appraisal, but don’t fear—you still have options. Draft a demand letter with your real estate agent. In the letter, ask the bank to pay for a second appraisal and explain your reasons why.[17]

2

Order your own second appraisal. If the bank won’t pay, you can pay yourself for an appraisal. Discuss this option with your real estate agent. You can also ask the seller/buyer if they want to split the cost, since you will both benefit from a higher appraisal.[18]

You can find appraisers at the National Association of Real Estate Appraisers website.[19]

3

Work with a different lender. You can start over with a different bank, which will have its own appraisal done. Generally, appraisals tend to be within 5-10% of each other, so you shouldn’t expect a drastic change. However, the change might be enough for your purposes.[20]

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Tips

If you are challenging your county’s assessment of your property for tax purposes, then you should contact the county assessor’s office. There should be a procedure in place for you to appeal your property taxes.